Money Watch Q & A: Student Loan Debt - KTVN Channel 2 - Reno Tahoe Sparks News, Weather, Video

Money Watch Q & A: Student Loan Debt

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In light of talk on Capitol Hill about the repayment of student loan debt, we asked Certified College Planning Specialist, Jim Van Meter to be our Money Watch Q & A guest. He also handles retirement planning with Tahoe Financial Planning.

Jim sways the best way to minimize higher education debt is to try to avoid loans altogether. How? “Failure to do career planning and get focused, so that the student works with a purpose and finish in four years. Many students 'drift' into college as a continuation of high school, and say that they will figure it out after a couple of years.  That can work, but usually is a formula for 5 or 6 year graduation, which necessitates additional borrowing,” explains Jim. Likewise, he says many students choose a college based on “name status” as opposed to financial aid. “For example, some students will choose to go to an out of state public and pay higher out of state tuition. Some parents agree to accept the student's choice, which is kind of like putting the teenage student in charge of your retirement plan, since college costs compete with retirement savings.”

Jim went on to explain that there are some loan forgiveness programs for federal student loans. “Forgiveness can be based on your type of work after college, such as non-profit, public service work, military, teaching in low income schools, and others.  The programs can have complicated rules and paperwork, which discourages many borrowers from pursuing them. There are also programs that limit payment to a percentage of income, or step up payments as the borrower's income increase. Generally, forgiveness requires a minimum number of years of consistent payment. In some cases, loan forgiveness can result in tax liability. Student loans are rarely forgiven in bankruptcy.” He mentions there are student loan consolidation program for existing Federal loans, again with many different rules. These can help a borrower lower debt payments over a longer period of time as much as 30 years, and as a result, allow them to qualify for a better home or car loan as they start out in adult life.

To learn more about the options available to you or strategies for minimizing debt, you can reach Jim Van Meter at Tahoe Financial Planning:

4741 Caughlin Parkway - Ste. 2

Reno, NV 89519

(775) 851-2345

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